How to Grow Your Firm the Easy Way

Four Levers that are Key to Growth: 1. Transitioning in and out of tax season; 2. Increasing year-round revenue; 3. Optimizing pricing; and 4. Changing client relationships.

When I started in this business (some 34 years ago) I was lucky enough to have great mentors. Maybe it’s more appropriate to say that some of the experienced tax pros I worked with had some very sage advice and observations. One of the best was that “things are only hard if you don’t understand them.”

I’ve been to lots of in-person and online workshops/webinars/etc. about growing my firm. The presenters have held every credential from marketing experts, to internet geniuses, to social media gurus. Their methods were formulaic processes that guaranteed me results in response to my dedication to their assumptions.

Guess what? None of them required me to understand my firm first, or allow for deviation from their plan based upon who we already were.

I’ll agree that action will create reaction – but growing your firm is both a simpler and more individualized process.

So one thing we need to do as an industry is give-up on the “growth is hard” mindset. You had growth this last tax season by way of referrals without even trying. Growth is easy. You might just need to know the easy ways to grow. And once you know them it will be hard for you NOT to grow.

It’s All about Leverage

The key to “growing the easy way” is understanding the levers in your practice that impact growth. By that I mean the things in your firm that have an amplified affect – those are your levers.

Think of it like a teeter-totter. Remember how easy it was to jump ten feet in the air when someone of your weight was on the other side? How about when they were heavier than you? That’s a lever.

A good lever gives you a multiplied (disproportionate) benefit-to-effort return. That’s what you’re looking for – that’s the thing you need to know about your firm.

What actions can you take inside your firm so that when you give and effort level of “1” to this or that, you get “3” back?

Small Changes can lead to Big Benefits

So many of the experts wanting to help me grow my firm left me with the feeling that I had to totally change what I was already doing. That was overwhelming to think about – and wasn’t realistically going to happen. I didn’t have the time or the energy to change so much that quickly. The result was paralysis – my inaction! And my inaction wasn’t going to grow my firm.

One of the other great bits of knowledge I’ve learned over the last 34 years of doing this is thinking about progress in the terms of “next steps”. That means to just focus on the very next (small – doable – right now) thing that helps me makes progress toward my goal.

Building the entire cathedral is a lot of work. But laying one brick – the next step – is easy. And easy is self-motivating. I want to do more of it because it’s easy.

“Next steps” have really allowed me to focus my attention and my energies on committing the single action that is next – the one that will move my cause forward. That’s the application of focused attention on a lever.

Understanding that concept has changed the game for me. Growing your/my/any firm is not a big sweeping effort that changes everything inside the company at once. It’s understanding the levers of that firm, and how to use them.

I’ve identified four levers that drive growth in my firm – let’s see if any of these apply to you. Once you understand these, you’ll start to see how simple it can be to achieve “easy” firm growth.

The Four Levers that are Key to Growth

Lever 1 – Transitioning in and out of tax season

Lever 2 – Increasing my year-round revenue

Lever 3 – Optimizing my pricing

Lever 4 – Changing my client relationships

For a deep dive discussion of each of these topics, check out the National Society of Accountants special webinar series devoted to this subject of growth. For now, let’s take some time to define and explain the value of each.

Lever 1 – Transitioning in and out of tax season

Ours’ is a business of two seasons. Tax season, and the rest of the year. They are uniquely challenging and as different in operation as anything could be.

The tax season is client driven, deadline motivated, and puts us in a “defensive” or “survival” mode. The rest of the year is tax pro driven requiring us to be offensively minded – aggressively seeking out new business.

Moving from one attitude to the other is the transition from defense to offense. Successful sports teams and famous coaches have figured out how to do this. How to quickly and seamlessly move from offense to defense and back again. In a basketball game this changeover will occur 50-60 times for each team. It happens so quickly and so often that you don’t even notice it unless you are looking.

Our transition is different. We must move from defense to offense after having been hunkered down for months – we must transition as we physically recover from exhaustion. And we only make two transitions a year. That means many of us never even recognize the need to do it, or that we are doing it.

Unintentional activity (things we do without intent) rarely yield good results.

When my firm makes a good, intentional transition into and out of tax season we have a better year! We do this by:

Recognizing the reality of the transition – in fact we almost celebrate it

This means as soon as staff gets back from their “tax season vacation time”, we have an all hands meetings to celebrate the close of the busy-season and the start of the post-season

Each member of the staff is responsible for presenting their ideas for initiatives the firm should prioritize in the next 90 days and clients that should receive extra attention

These on-purpose decisions help everyone acknowledge that we still have goals for this time of year and the logistics in the firm that need to be aligned with those goals

Self-reporting and analyzing business development results each week

It’s impossible to track your progress against your goals if you don’t collect data to see what’s really happening. Purposefully tracking the data around activities everyone in the firm is taking to help with business development, allows us to analyze this data and see if and when adjustment is needed to those activity levels

Can you see how this part of the year is devoted to intentional activity – collectively acknowledged – on purpose? A successful transition comes from this mindset.

Lever 2 – Increasing your year-round revenue

A successful transition is key to lever 2! Historically, firms in our industry produce 70-80% of annual revenue during tax season. What? That’s a business model doomed to fail. Needing to capture 80% of annual revenue in less than 25% of the year is just plain nuts.

Breaking out of that cycle requires using the other 75% of the year to create revenue. Have you ever noticed how incredibly productive you are during tax season? Have you ever measured how much you can get done on March 12th?

Contrast that with your productivity on August 28th… It’s staggering to think about what would be possible if you could take the rest of the year to simply replicate your tax season output.

Putting this theory to practice, you actually now how 75% of the year during your post-season calendar to achieve the same results you did in the first 25%. Mathematically that means you only need to be 1/3 as productive to receive the same amount of benefit aka, revenue.

That’s our firm goal – on April 30th each year we look at YTD revenues to know what the next eight months will look like – the target is clearly set and we get back to work.

The key to post-season revenue, and making every month a money making opportunity for us is recognizing synergy – synergy with our clients, and synergy with how we provide them value.

To successfully utilize the second lever – post season revenue, you would focus on:

Aligning additional services with your “why” makes them easy to provide, and easy to engage with clients

You are your client’s most trusted financial advisor. They want to do more business with you, you just need to discover what that business is – in other words, you need to know what they want, and then (as long as it supports your why), find a way to help them get it.

Lever 3 – Optimizing your pricing

Increasing revenues also has a lot to do with pricing the services you offer. Have you ever been in a negotiation and the other side agrees to your opening offer – quickly? You walk away feeling as if you could/should have asked for more. How about making an offer and getting no response at all? Ooops…maybe you were too aggressive.

Learning how to price your services, how to optimize pricing for specific outcomes, will help your staff, clients and partners to feel good about the work you do and the result it generates.

Paying too much doesn’t help anyone in the relationship, and neither does paying too little. But where did your pricing model come from in the first place?

Most of us didn’t set our original price menu on purpose – we priced accidentally. And we’re getting accidental results. Our pricing model shouldn’t be based on the fee schedule from the firm we left to start our own. Our pricing model needs to be based on the value we provide.

Here are some basic ways you can align your pricing with your value:

Being more convenient for clients

This means taking tangible steps to make working with you easier for your clients and then adjusting your price upwards based on that new level of convenience.

Be transparent to clients

Letting your clients know exactly what you’re really giving them for the price they’re paying. Do you still send an invoice with one line item that says “2015 Income Tax Return – $250”? How does that help the client really understand all the work you did to give them piece of mind, help them save on their tax bill and provide support throughout the year? In short, it doesn’t. You should strive to be way more explicit in how you explain what your clients are getting for your services. Think about the benefits your work for them provides, not the actual steps in your work.

Embody (institutionally) “same team” philosophy

That means that your attitudes, your pricing structure, and your procedures have to re-inforce the concept that you and the client are in a mutually beneficial relationship. No one is trying to “get one over” on other party. The only way you win is if both parties win. This starts with an over-arching attitude from firm management and then trickles down to the staff and into every aspect of the firm from there.

Understanding the value you create and translating that into the price you charge will make all the difference. Then, making it more convenient for your clients to pay for your value, and showing them you’re on the same side, is the icing on the cake.

Lever 4 – Changing your client relationships

Have you ever arrived at your office, taken a look at your client line-up for the day, and just wanted to go home? You looked at your calendar and saw client-after-client of difficult-to-work-with people.

You knew this was going to be a tough day. Well, stop it! Time for some training…

When I realized that my clients were treating me exactly the way I had taught them to, I knew it was time for some new lessons. The truth is that we get the treatment we deserve. If our clients are treating us poorly it’s time to change the relationship.

Much of this can be solved by making some decisions. Decisions like:

How do we want to be treated?

What kind of boundaries do we need to establish to get that treatment?

What consequences are we willing to enforce to get the desired behavior?

How will getting the desired behavior change your day-to-day happiness?

Imagine the pleasure you will have working with clients and team members who treat you the way you desire! It’s an exciting thought and it’s totally feasible if you start re-focusing on client relationships and begin training your clients to act and re-act in ways that align with your firm’s goals.

Take Aways

Growing your firm isn’t hard. It’s just different from the behavior that we’re used to. It is more our habit to spend our day running from one fire to the next in the direction of the urgent but unimportant.

The cost of operating this way is your future.

This year take the easy way to growth. Learn what levers impact growth in your firm. Then apply focused attention on those levers.

The result will create natural growth in your firm and the motivation to keep that behavior up!

You might not have been surprised by some of the things we presented here. The fact is, they are all intuitive and natural outgrowths of modern practice management. And if you found yourself nodding your head in agreement and then scratching your head wondering “but how do I do that?” you’re not alone.

Join us this summer for the National Society of Accountants free webinar series where we’ll attack the key points presented here. Each session is valuable on its own, but collectively they’ll help you understand all the key levers that make growing a small firm easier. We believe that life doesn’t have to be hard – join us if you agree!

Chris Basom is the co-founder of TaxPro University & SmartCenter. He is also the managing partner of a tax & financial planning firm in Southern California. With 34 years as a tax professional, Chris knows first-hand, the struggles small firms face and how to combat them. He developed TaxProU & SmartCenter to make managing a practice and collaborating with clients, simpler and easier for small firm owners.

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